All change at Companies House?

UK government consultation on top-to-toe overhaul

Do you recall the last time you registered a new company with Companies House? Maybe you have no recollection - after all, company registration is such a straightforward process - until now. The UK government has announced a proposed complete overhaul of this 175-year-old registry.

Why change? Surely ‘If it ain’t broke, don’t fix it’. The problem is that the government believe that the process of company registration is broke and it definitely does need fixing.
According to the government, the main issues that need addressing are the ever-increasing risk of fraud and misuse of information. The government aims to do this by –

– widening the information companies are required to disclose
– improving the checks on this information
– enhancing the exchange of intelligence between Companies House, HMRC and law enforcement bodies.

Let’s look at the proposals in a little more detail.

Identity checks

The government proposes that anyone with a key role in a company should have to verify their identity – company officers (directors), people with significant control (PSCs) and those filing information. Failure to do so would result in denial of incorporation.

They are also considering the requirement that more shareholder information be disclosed and verified.

Improving the accuracy and usability of data

Traditionally, Companies House has dealt with data inaccuracies only after they have been registered. They now propose a more proactive approach, where they query information prior to registration.

They will have the power to ask for further evidence – for example, when a company files information that represents a significant change from its previous status, for example:

– when there is a significant increase in share capital
– where a company claims an exemption from filing full accounts

Increasingly, third parties are complaining to Companies House about inaccurate information filed by companies – for example, false claims regarding the auditing of annual accounts or fraudulently appointed key individuals.

Under the new model, the government will be far stricter in dealing with any such false claims, with the onus being on the offending company to prove compliance.

Annual accounts

The government plans to introduce a more uniform format for the submission of accounts. This will allow for automated checks, improved statistical analysis and a halt to the frequent practice of delayed accounts submissions, which companies use to conceal financial difficulties or the extent of their assets and liabilities.

Sharing Intelligence

The government is determined to be more astute at identifying possible criminal behaviour. It plans to achieve this by

1. being more sophisticated in how it shares intelligence with other bodies.
2. being more efficient about tackling money laundering. One approach they are considering is to introduce a new requirement for UK companies to notify Companies House within 14 days of a non-UK bank account being opened. When requested, they would have to disclose full details of the account.
3. bringing in a cap on the number of directorships that an individual may hold concurrently.
4. being more rigorous about querying and, if necessary, rejecting company names before they are registered.

Implementation - how will these changes take place?

The government recognises that to implement these radical changes will require a massive upheaval in terms of digital technology, processes and skills. Clearly, the current systems are inadequate and a major root-and-branch overhaul is needed. The entire process will be time-consuming, expensive and will require legislation before it can be implemented.

Kelly Tolhurst is a government Business Minister. She explains, ‘The reforms will support the fight against the use of dirty money in the UK and enhance the protections for entrepreneurs and directors from criminal activity.

‘Knowing that a company’s information is accurate and transparent is a fundamental part of a leading business environment – giving entrepreneurs and businesses the confidence they need to do business in the UK.’

Please note

We are experts in all matters of tax and compliance. Whatever changes that Companies House undergoes in the next few years, we’ll be at your side, making sure that you comply.

We’re here to help.

Disclaimer

This legal information is not the same as legal advice and you may not rely on our post as a recommendation of any particular legal understanding. Please, consult an attorney if you’d like to get advice on your interpretation of this article.

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